Correlation Between Pfizer and Invesco Exchange

Can any of the company-specific risk be diversified away by investing in both Pfizer and Invesco Exchange at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pfizer and Invesco Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pfizer Inc and Invesco Exchange Traded, you can compare the effects of market volatilities on Pfizer and Invesco Exchange and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pfizer with a short position of Invesco Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and Invesco Exchange.

Diversification Opportunities for Pfizer and Invesco Exchange

0.1

Correlation Coefficient

Pfizer  Invesco Exchange

Average diversification

The 3 months correlation between Pfizer and Invesco is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Invesco Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Exchange Traded and Pfizer is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pfizer Inc are associated (or correlated) with Invesco Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Exchange Traded has no effect on the direction of Pfizer i.e., Pfizer and Invesco Exchange go up and down completely randomly.

Pair Corralation between Pfizer and Invesco Exchange

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Invesco Exchange. In addition to that, Pfizer is 1.56 times more volatile than Invesco Exchange Traded. It trades about -0.05 of its total potential returns per unit of risk. Invesco Exchange Traded is currently generating about 0.04 per unit of volatility. If you would invest  6,909  in Invesco Exchange Traded on December 29, 2024 and sell it today you would earn a total of  116.00  from holding Invesco Exchange Traded or generate 1.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Pfizer Inc  vs.  Invesco Exchange Traded

Pfizer Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Pfizer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Invesco Exchange Traded

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Exchange Traded are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Invesco Exchange is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pfizer and Invesco Exchange

The main advantage of trading using opposite Pfizer and Invesco Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer position performs unexpectedly, Invesco Exchange can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Invesco Exchange will offset losses from the drop in Invesco Exchange's long position.

The idea behind Pfizer Inc and Invesco Exchange Traded pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.